TY - JOUR
AU - Hilt,Eric
AU - O'Banion,Katharine E.
TI - The Limited Partnership in New York, 1822-1853: Partnerships without Kinship
JF - National Bureau of Economic Research Working Paper Series
VL - No. 14412
PY - 2008
Y2 - October 2008
DO - 10.3386/w14412
UR - http://www.nber.org/papers/w14412
L1 - http://www.nber.org/papers/w14412.pdf
N1 - Author contact info:
Eric Hilt
Wellesley College
Department of Economics
106 Central Street
Wellesley, MA 02481
Tel: 781/283-2986
Fax: 781/283-2177
E-Mail: ehilt@wellesley.edu
Katharine E. O'Banion
Yale Law School
New Haven, CT 06520
E-Mail: katharine.obanion@yale.edu
AB - In 1822, New York became the first common-law state to authorize the formation of limited partnerships, and over the ensuing decades, many other states followed. Most prior research has suggested that these statutes were utilized only rarely, but little is known about their effects. Using newly collected data, this paper analyzes the use of the limited partnership in nineteenth-century New York City. We find that the limited partnership form was adopted by a surprising number of firms, and that limited partnerships had more capital, failed at lower rates, and were less likely to be formed on the basis of kinship ties, compared to ordinary partnerships. The latter differences were not simply due to selection: even though the merchants who invested in limited partnerships were a wealthy and successful elite, their own ordinary partnerships were quite different from their limited partnerships. The results suggest that the limited partnership facilitated investments outside kinship networks, and into the hands of talented young merchants.
ER -